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DWD Worker Classification

UI Employer Services

Unemployment Insurance - Worker Classification

Is a Worker an "Employee" or an "Independent Contractor"?

Wisconsin employers (referred to as “employing units” in the unemployment insurance law until unemployment insurance coverage or an employee/employer relationship is established) have an obligation under the unemployment insurance law
to classify workers correctly as either "employees" or "independent
contractors". Employees are covered by the unemployment insurance law;
independent contractors are not covered.

If a worker is or has been "performing services for pay" for an employing unit, there is a presumption in the law that the worker is an "employee," not an independent contractor. That presumption can only be overcome by evidence under the applicable unemployment insurance law that the worker is an independent contractor.

NOTE:
The department has utilized the term "employer" in this website with the recognition that not all "employing units" are covered under the unemployment insurance law or have employee/employer relationships with their workers. Nevertheless, for ease of discussion in the context of deciding whether a worker is an independent contractor or an employee, the term "employer" is frequently used, rather than "employing unit."

Compliance and Penalties

The department works to ensure that workers are properly classified as employees or independent contractors through
compliance programs. If an employer is found to be improperly classifying workers as independent
contractors, penalties may result.

Steps to Classify a Worker

Choose Category of Employer

The first step in the process of determining an employer's obligation under the
unemployment insurance law is to determine which of the
following categories describes the employer:

General Private Employers
(services performed for any other person or entity)

State and local government employers
(service performed for a unit of state or local government)

Nonprofit employers
(services performed for an organization that is described in §501(c)(3) and
exempt from federal income tax under §501(a) of the Internal Revenue Code)

Trucking employers
(services performed as a truck driver for a licensed motor carrier that leases a
vehicle from the contract operator)

Logging employers (services
performed as a piece cutter or skidding operator for a forest products
manufacturer or logging contractor)

Indian tribal government employers
(services performed for an Indian tribe that is federally recognized under 25
USC 450B(e))

The department is authorized by Wis. Stat. §
103.06,
to conduct compliance investigations at construction worksites as defined in
Wis. Stat. § 108.18 (2)(c) to determine if workers are being properly classified as employees or independent contractors.

If an employer is found to be utilizing misclassified workers, the employer
may be liable for additional tax, interest and penalties. If as a result
of a worksite compliance investigation an employer is found to be utilizing
misclassified workers, additional tax, interest and civil penalties, including
the issuance of stop work orders, may result.

In addition, Wis. Stat. §
108.24 (2m), states that employers described in Wis. Stat. §
108.18 (2)(c), or who are
engaged in the painting or drywall finishing of
buildings or other structures who willfully provide false information to the
department for the purpose of misclassifying or attempting to misclassify a
worker as an independent contractor can be fined $25,000 for each violation.
Employers described in Wis. Stat. §
108.18 (2)(c),
include those engaged in the construction of roads, bridges,
highways, sewers, water mains, utilities, public buildings, factories, housing,
or similar construction projects.